Adam JacksonInnovative Industrial Properties (NYSE: IIPR) eked past Wall Street expectations in the fourth quarter as its portfolio occupancy improved, though the company continued navigating tenant challenges.
The cannabis real estate investment trust reported net income of $39.5 million, or $1.36 per diluted share, for the quarter that ended Dec. 31, 2024, according to a news release. Revenue of $76.7 million surpassed Seeking Alpha’s analyst estimates of $76.2 million. Revenue, however, fell 3% from $79.2 million in the same period the previous year.
Normalized funds from operations reached $2.03 per share, beating Seeking Alpha’s consensus estimate of $1.99. IIP’s operating portfolio showed improvement, with occupancy reaching 98.3% leased by year-end, up from 95.7% at the end of the third quarter.
The REIT is dealing with a second shareholder lawsuit filed in Maryland district court last month alleging it misled investors about tenant risks while continuing to fund PharmaCann’s expansion. The two companies struck an agreement in January to resolve lease defaults across 11 properties by reducing monthly base rent from $2.8 million to $2.6 million for nine properties. The REIT is also working to transition two cultivation facilities in Michigan and Massachusetts to new operators.
Security deposit applications for rent payments rose significantly, with $5.7 million applied across five tenants in the fourth quarter versus just $800,000 for one tenant a year earlier.
Still, IIP maintained its dividend, paying stockholders $1.90 per share in last month. The company said it has increased its dividend annually since its 2016 inception.
Multistate operators represent 90% of IIP’s annualized base rent, with public company operators accounting for 62%. No single tenant represents more than 17% of rental income.
IIP reported having a 20,000-square-foot property under contract in Maryland for $7.8 million, though the deal remains subject to closing conditions, according to the earnings release.
The company’s quarterly expenses edged up to $34.7 million from $34.6 million in the third quarter while falling from $35.2 million in the same period last year.
